In the context of real estate, what does "equity" allow homeowners to do?

Equity refers to the ownership interest that homeowners have in their property, which is the difference between the market value of the home and the outstanding mortgage balance. When homeowners build equity, they can tap into this value to access funds for future investments. This can be done through options such as home equity loans or lines of credit, allowing them to borrow against the equity they have accrued. It serves as a financial resource that can be utilized for various purposes, such as financing home improvements, consolidating debt, or making other investments.

The other choices do not accurately represent the functionality of equity in real estate. While minimizing property taxes and increasing property limits could be relevant to homeownership, they do not directly relate to the concept of equity. Additionally, equity would not limit borrowing capacity; in fact, having more equity typically enhances a homeowner's ability to borrow against their property.